2342 Rayeurn House OFFice BUILOING
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COMMITTEE ON FOREIGN AFFAIRS: G Y7 YY5 35 Journat Sauare, Suite 906
Suscommirtees: y Jersey City, NJ 07306

(201) 222-2828

ALBIO SIRES

137H District, New Jersey

Western HEMISPHERE
EUROPE AND EURASIA 5500 PaLisabe Avenue, Suite A

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Washington, AC 20515-3013 (201) 823-2900

100 Cooke AvENUE, 2ND FLooR
Carteret, NJ 07008
(732) 969-9160

1 OLIVE STREET, 2ND FLOOR

May 16, 2011 we(ya21ad20610
Secretary Hilda Solis a
U.S. Department of Labor a
200 Constitution Ave NW 3
Washington, DC 20210 =

Dear Secretary Solis,

1 am writing with respect to the Department of Labor (DOL) proposal to redefine a "fiduciary"
under Employee Retirement Income Security Act of 1974 (ERISA). I share your Department’s
view that it is critical to protect individuals from misleading advice and predatory practices in the
financial markets and I thank you for your continued leadership. However, upon review of the
proposal, I am concerned that the proposed rule broadly expands the types of activities
constituted as “investment advice,” making the provider a fiduciary and the activity a prohibited
transaction. As such, I am concerned about the impact of the proposal on investor choice of
financial products, access to financial education, and the costs to retirement plan participants.

Specifically, I am concerned that the proposed definition of fiduciary may lead to increased costs
to individual retirement account (IRA) holders and limit access to financial advisors. A study by
the consulting firm, Oliver Wyman, on the impact on IRAs found that estimated direct costs to
IRA holders would likely increase and that small investors would have diminished access to
financial advisors. According to their study, low-income investors with the smaller accounts will
be most impacted by the proposal. These investors would be required to move their accounts
either to self-direct accounts with no advice or guidance, or to higher cost advisory accounts. |
strongly urge the Department to carefully examine the practical impacts of the proposal before
moving forward with a final ruling.

Additionally, I urge the Department to ensure that this rule is complementary to those proposed
by other agencies. The issue of fiduciary standards was explored in depth and actively discussed
during the debate of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-
Frank) and as a result, the Securities and Exchange Commission (SEC) is in the process of
writing its fiduciary rules as mandated by Dodd-Frank. I am concerned that the fiduciary
standards proposed by the DOL may be in conflict with the SEC’s proposal. For instance, the
SEC conducted a study, issued in January 2011, which found that maintaining multiple business
models, whether advisory fee-based or commission brokerage, was best for investors. I have


concerns that the DOL proposal would negatively impact the viability of commission-based
brokerage accounts, which is what the majority of investors choose today.

In closing, I ask that the Department consider re-proposing this rule. A re-proposal would allow
for a more concerted effort to determine the best course for ERISA and IRA accounts, market
participants, and individual investors. Additionally, a re-proposal would also allow for greater
interagency coordination and cooperation on these issues.

I thank you, again, for your hard work to protect American investors. I look forward to continued
dialogue on this issue so that we may continue to work towards a strong and stable financial

future.
Sincerely, fl?
Albio Sires
Member of Congress